CBS v. TWC: The Cable Wars Drag On

Two weeks into the battle between CBS corporation and Time Warner Cable, over 3 million subscribers are still without CBS and Showtime.

The major hurdle for both the cable provider and the network seems to be the dispute over digital content. According to the Wall Street Journal, “What remains at issue is the difference between the amount of money that Time Warner Cable is willing to pay CBS to license its content and what CBS is actually willing to accept for that privilege.

Unfortunately, the CBS/Time Warner Cable battle may be only the first of many headaches for cable subscribers. As cable providers seek to renew contracts with providers of broadcast content, online TV services like Hulu and Netflix – unavailable just a few years ago – add a new level of complexity to negotiations.

Part of the reason the battle between CBS and Time Warner may have turned so bitter is because both sides are trying to establish favorable precedent for future contracts with their counterparts.

Meanwhile, TWC subscribers are becoming increasingly impatient. The CBS blackout has meant the loss of several pre-season NFL football games as well as the PGA Championship for viewers. It will also mean the loss of the U.S. Open at the end of the month, if the contract is not resolved.

TWC subscribers have taken matters into their own hands. In southern California, a class action lawsuit filed against Time Warner Cable alleges that new subscribers were falsely coerced into signing up for Time Warner Cable with no knowledge that a contract dispute loomed on the horizon.

With good reason, Time Warner Cable customers may feel a little left out. CBS is the most popular network in the United States. Its primetime shows consistently rank among the most watched programs on television. It is also airs awards shows like the Grammys, The People’s Choice Awards, The Country Music Awards and The Tonys. In addition, CBS is home to several pro sporting events. The Tiffany Network has MLB, the NBA, MLB, NCAA college basketball and most importantly, to this dispute, it has a contract with the NFL.

Fans of CBS subsidiary network Showtime are experiencing their own crises right now. The final season of the hit show, Dexter, began airing earlier this summer. As the series winds down, frustrated fans are missing out on the final episodes of the show.

Both sides are now firmly entrenched, prepared to simply wait out their opponent. Time Warner must weigh the inevitable drop in the number of subscribers that will occur from viewers unable to get CBS programming, who will abandon the cable provider altogether, while CBS runs the risk of losing significant viewership and audience members on some of America’s highest-rated shows.

With the arrival of autumn, both camps will have their mettle tested. CBS is about to unveil a new fall lineup that will include shows desperate for audience attention and advertising dollars. With fall comes the start of regular-season football, and the NFL is a television juggernaut.

A Nielsen report in 2003 estimated that CBS reaches about 97 percent of households in the United States. By that math, a fall of 3 million viewers accounts for about a 2.5 percent drop-off from its total audience. A small but not insignificant number, to be sure. In an era when battles between networks are won by the slimmest margins and at a season when new television shows are canceled and picked up based on a few tenths of a percentage point, every TV set counts.

The only clear winner in this battle is TWC competitor Verizon FiOS. The New York Daily News reports, “The telecom giant, according to industry sources, has seen its FiOS subscription base rise between 5 percent and 15 percent in various neighborhoods compared to last year.”